Consumerism | timiacono.com - Part 3

U.S. Retail Sales in April Disappoint

The Commerce Department reported(.pdf) that retail sales rose far less than expected last month, up just 0.1 percent in April after big upwardly revised gains during the prior two months and a sharp slowdown over the winter.

The consensus of analysts was for a gain of 0.4 percent in the headline figure, but the miss was even worse when excluding automobiles and gasoline as expectations were higher but sales were even lower, flat and down 0.1 percent, respectively.

Sales rose for 8 of the 13 major categories, but big declines in a few groups offset nearly all of the modest gains elsewhere. Sales at both miscellaneous stores and electronics & appliance stores tumbled 2.3 percent while sales at non-store retailers and restaurants & bars both fell 0.9 percent to pace the declining categories.

Clothing store sales rose 1.2 percent, gasoline station receipts were 0.8 percent higher, and automobile sales were up 0.7 percent to lead the rising categories.

If not for the huge upward revision to prior months – the March increase was adjusted up from 1.2 percent to 1.5 percent for the biggest gain in four years and February’s 0.7 percent gain rose to 0.9 percent – this report would have been even worse.

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Retail Sales Surge on Spring Thaw

The Commerce Department reported(.pdf) that U.S. retail sales jumped 1.1 percent in March, the biggest monthly increase since September 2012, as Americans released pent-up demand that resulted from an unusually harsh winter.

Last month’s gain was slightly above elevated estimates, exceeding the level of spending last November before the bad weather set in, and the February data was revised upward, from a gain of 0.3 percent to 0.7 percent, all signs of improving underlying demand.

Auto sales drove the overall increase in spending with a 3.1 percent boost last month, this following an upwardly revised gain of 2.5 percent the month prior. Excluding motor vehicles, sales rose 0.7 percent after a gain of 0.3 percent in February.

Gasoline station sales actually dropped 1.3 percent (though they’ll be going back up next month based on recent price increases) and, excluding both autos and gasoline, retail sales rose 1.0 percent.

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Sentiment Rises, Stocks Fall

Right up until the chart below was prepared, it seemed the key point of this post was going to be that consumer sentiment is holding steady near some its best post-recession levels, but, in looking at the curve below it seems more important to ask what all the hubbub is about in the stock market that, according to some, is in some kind of death spiral.

Anyway, the American mood remained near its best levels since the 2008 recession as the Reuters/University of Michigan consumer sentiment index rose from a final March reading of 80.0 to 82.6 in the first of two readings for April.

This is consistent with other recent measures of consumer confidence and, for this index, marks the highest level since last July. While the full-month reading for April could move lower when it is reported in two weeks, it is worth noting that sentiment was higher in only four other months going back more than six years. The expectations component rose from 70.0 to 73.3 and current conditions improved from 95.7 to 97.1.

Survey director Richard Curtin commented, “Economic news reaching consumers grew more favorable in early April. Net reports on changes in employment were more favorable, and negative mentions about current economic policies eased.”

Rising gasoline prices have yet to have a signicant impact on inflation expectations as the one-year outlook for overall price increases actually fell from 3.2 percent to 3.1 percent while the five-year outlook moved up only slightly from 2.9 percent to 3.0 percent.

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Confidence Begins to Fade

Confirming what was seen in this item earlier in the week via the latest weekly economic confidence survey from Gallup, the mood of the American consumer appears to be fading as a harsh winter gives way to spring, at least according to the latest reading on consumer sentiment from Reuters and the University of Michigan.

In the first of two readings for March, the index fell from 81.6 in February to 79.9 this month, its lowest level in almost a year, save for the most recent episode of the government shooting itself in the foot again last fall via a partial shutdown.

As was the case for the Gallup survey, the overall decline was driven by reduced expectations about the future as this component dropped from 72.7 to 69.4, its lowest level since November. The current conditions component actually rose, from 95.4 to 96.1, as Americans were more confident about their personal finances.

In a testament to the Federal Reserve’s ongoing effort to inflate asset prices, the fewest share of homeowners since 2007 said their homes had lost value over the last year, though respondents said home price gains would slow in the year ahead.

Fear of inflation is still nowhere to be seen as the one-year outlook puts prices 3.2 percent higher while inflation five years from now is seen coming in at a rate of just 2.9 percent.

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